In a tweeted statement, Chamath Palihapitiya said that he has sold 15% of his stake in SoFi Technologies (NASDAQ:SOFI), raising questions about the market timing of the sale. His announcement also put pressure on shares of SOFI stock.
Palihapitiya made the sale of SOFI stock after he said publicly that inflation is running too hot and as stock markets are at all-time highs, with some prominent investors calling the current situation a “bubble” that is waiting to burst.
These comments — and the current market froth — have investors scrutinizing Palihapitiya’s sale of SoFi shares. Now they are looking for signals of what it says about stocks moving forward.
What Happened With SOFI Stock
In a lengthy Twitter statement, Chamath Palihapitiya sounded a pessimistic tone, stating: “It’s not all green lights.” He also noted that inflation is running at 30-year highs and that the U.S. government is printing more money than at anytime in the past. The influential investor also noted that entrepreneurs “are taking chips off the table,” selling more than $10 billion of equities this year.
Following the musings on the current state of the economy and stock market, Palihapitiya said, despite the current risks, he still sees opportunities and that he is selling 15% of his holdings in SOFI stock to raise cash and “fund several new investments.”
1/ Many of us are trying to make sense of what’s happening in the markets these days. Here are some observations and moves we’ve recently made to continue our work: pic.twitter.com/Z4yA7sS3N6
— Chamath Palihapitiya (@chamath) November 18, 2021
In particular, Palihapitiya said he is investing in several private startup companies, as well as healthcare insurer Clover Health (NASDAQ:CLOV). CLOV stock took a hit earlier this week after it announced plans for a secondary stock offering.
Why It Matters
Chamath Palihapitiya is an influential venture capitalist who has a big following. When he speaks, investors listen. The generally pessimistic comments about the economy and stock market echo the bearish sentiments expressed by many prominent investors in recent weeks. As stocks continue to reach all-time highs, many of the loudest voices on Wall Street are claiming that a bubble has formed, pointing to unsustainable valuations and the run-up in cryptocurrency prices as evidence.
Chamath Palihapitiya’s sale of SOFI stock is unlikely to harm the company or its share price significantly given that he only unloaded 15% of his holdings and did so to raise cash. Year to date, SoFi Technologies’ share price is up nearly 70% at just over $20. However, his stated intention to invest in Clover Health is curious given that the healthcare insurer continues to struggle financially and CLOV stock is down 64% YTD at $5.61 per share. Clover Health has also been treated as a meme stock.
Chamath Palihapitiya’s interest in Clover Health is likely to be seen as a vote of confidence in the struggling company and might help CLOV stock rebound some in the near term.
What’s Next for SoFi
Market sentiment is increasingly mixed with many investors becoming more bearish as we near year’s end. Chamath Palihapitiya is the latest influential investor to lend his voice to the growing chorus that is sounding the alarm on risk. That said, he continues to search out opportunities and claims to have found a handful.
Other investors will have to decide for themselves if they want to follow Chamath Palihapitiya or stick to their own plans for allocating capital.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
